SECTIONS 12735-12738 - California Statutes

INSURANCE CODE

SECTION 12735-12738

12735. Upon enrollment as a subscriber in the program, the
subscriber shall be responsible for payment of the subscriber
contribution. Termination of coverage by a participating health plan
for nonpayment of the subscriber contribution shall be governed by
the same laws and regulations by which the participating health plan
is regulated as to all its subscribers and enrollees.

12736. Each health plan contracting with the board pursuant to
Chapter 5 (commencing with Section 12720) shall submit annually to
the program rates which it estimates are sufficient to cover the cost
of providing major risk medical coverage to its subscribers. The
rates shall be submitted on the basis of categories of risk which
shall be established by the board.

12737. (a) The board shall establish program contribution amounts
for each category of risk for each participating health plan. The
program contribution amounts shall be based on the average amount of
subsidy funds required for the program as a whole. To determine the
average amount of subsidy funds required, the board shall calculate a
loss ratio, including all medical costs, administration fees, and
risk payments, for the program in the prior calendar year. The loss
ratio shall be calculated using 125 percent of the standard average
individual rates for comparable coverage as the denominator, and all
medical costs, administration fees, and risk payments as the
numerator. The average amount of subsidy funds required is calculated
by subtracting 100 percent from the program loss ratio. For purposes
of calculating the program loss ratio, no participating health plan'
s loss ratio shall be less than 100 percent and participating health
plans with fewer than 1,000 program members shall be excluded from
the calculation.
Subscriber contributions shall be established to encourage members
to select those health plans requiring subsidy funds at or below the
program average subsidy. Subscriber contribution amounts shall be
established so that no subscriber receives a subsidy greater than the
program average subsidy, except that:
(1) In all areas of the state, at least one plan shall be
available to program participants at an average subscriber
contribution of 125 percent of the standard average individual rates
for comparable coverage.
(2) No subscriber contribution shall be increased by more than 10
percent above 125 percent of the standard average individual rates
for comparable coverage.
(3) Subscriber contributions for participating health plans
joining the program after January 1, 1997, shall be established at
125 percent of the standard average individual rates for comparable
coverage for the first two benefit years the plan participates in the
program.
(b) The program shall pay program contribution amounts to
participating health plans from the Major Risk Medical Insurance
Fund.

12738. A participating health plan may charge subscriber
contributions under this chapter which do not exceed the difference
between its plan rate for the category of risk and the program
contribution amount for the category of risk.